House Flipping Calculator — ARV, Rehab & Profit
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70% Rule Max Purchase
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How House Flipping Works
House flipping is the practice of purchasing a distressed or undervalued property, renovating it, and reselling it at a profit within a relatively short timeframe, typically 3 to 9 months. According to ATTOM Data Solutions, approximately 308,000 single-family homes were flipped in the United States in 2024, representing about 7.7% of all home sales. The average gross profit on a flip was $66,000, though this figure does not account for rehab costs, holding costs, or selling expenses.
The key metric in house flipping is the After Repair Value (ARV) -- the estimated market value of the property after all renovations are complete. Successful flippers analyze comparable sales (comps) within a half-mile radius sold in the past 90 days to estimate ARV accurately. The popular 70% rule, widely used by real estate investors, states that you should pay no more than 70% of ARV minus repair costs. This margin accounts for holding costs, selling costs, and a reasonable profit. Using this calculator alongside a mortgage calculator helps model both the financing and the profit potential of any deal.
The House Flipping Formula
The standard profit analysis used by real estate investors follows this structure, as outlined in resources from the National Association of Realtors:
- Total Investment = Purchase Price + Rehab Costs + (Holding Costs x Months) + (ARV x Selling Cost %)
- Net Profit = ARV - Total Investment
- ROI = (Net Profit / Total Investment) x 100
- 70% Rule Max Purchase = ARV x 0.70 - Rehab Costs
Worked example: A property with an ARV of $300,000, purchased for $180,000, with $40,000 in rehab, $2,000/month in holding costs over 4 months ($8,000), and 8% selling costs ($24,000): Total investment = $180,000 + $40,000 + $8,000 + $24,000 = $252,000. Net profit = $300,000 - $252,000 = $48,000. ROI = 19.0%. The 70% rule maximum purchase price would be $300,000 x 0.70 - $40,000 = $170,000.
Key Terms You Should Know
- After Repair Value (ARV): The estimated market value of the property after all renovations are complete. Determined by analyzing comparable sales in the area. Accurate ARV estimation is the single most critical factor in flip profitability.
- Holding Costs: Monthly expenses incurred while owning the property during renovation -- mortgage payments, property taxes, insurance, utilities, and HOA fees. Typically $1,500-$3,500/month depending on property value and location.
- Hard Money Loan: A short-term loan from private investors commonly used by house flippers. Rates range from 10-15% with 2-5 points in origination fees, but they close faster and have less stringent qualification requirements than conventional mortgages.
- Selling Costs: All expenses incurred when selling the property, including real estate agent commissions (5-6%), transfer taxes (0.5-2%), title insurance, and closing fees. Typically 8-10% of the sale price total.
- Scope of Work (SOW): A detailed document listing every renovation task, materials, and costs. A thorough SOW prevents budget overruns, which ATTOM data shows average 10-20% above initial estimates for inexperienced flippers.
House Flip Profit Margins by Scenario
The table below illustrates how different purchase prices, rehab budgets, and hold times affect profitability on a $300,000 ARV property. According to ATTOM, the average flip timeline in 2024 was 178 days, and the average gross ROI was 28.7% before expenses.
| Scenario | Purchase | Rehab | Hold (mo) | Net Profit | ROI |
|---|---|---|---|---|---|
| Conservative (70% rule) | $170,000 | $40,000 | 4 | $58,000 | 23.5% |
| Moderate | $190,000 | $40,000 | 5 | $36,000 | 13.6% |
| Aggressive | $210,000 | $40,000 | 6 | $14,000 | 4.9% |
| Heavy rehab | $150,000 | $80,000 | 6 | $34,000 | 11.3% |
Practical Examples
Example 1 -- Beginner cosmetic flip: Maria purchases a 1,400 sq ft ranch home for $165,000 with an ARV of $240,000. She invests $25,000 in cosmetic updates (paint, flooring, kitchen countertops, landscaping) over 3 months. Holding costs are $1,800/month ($5,400 total), and selling costs at 8% total $19,200. Her total investment is $214,600, yielding a profit of $25,400 and an ROI of 11.8%. A solid first flip with manageable risk.
Example 2 -- Full renovation flip: Carlos uses a hard money loan at 12% to buy a distressed property for $200,000 with an ARV of $350,000. Rehab costs total $70,000 over 5 months. His holding costs are $3,200/month (including hard money interest), totaling $16,000. Selling costs at 9% are $31,500. Total investment: $317,500. Net profit: $32,500 with a 10.2% ROI. The thin margin shows why controlling rehab timelines and budgets is critical. He uses the ROI calculator to model different scenarios before committing.
Example 3 -- BRRRR strategy hybrid: Jennifer buys a duplex for $180,000, invests $50,000 in renovation (ARV $310,000), and instead of selling, refinances at 75% LTV ($232,500 loan) to recover most of her capital. She keeps the property as a rental generating $2,800/month while having only $47,500 of her own cash still invested. This approach combines flipping profit with long-term rental income.
Tips and Strategies for Profitable Flips
- Always follow the 70% rule: Paying more than 70% of ARV minus repairs compresses margins to the point where any unexpected cost wipes out profit. Experienced flippers use 65% in competitive markets for extra safety margin.
- Budget 15-20% contingency on rehab: Unexpected issues like foundation problems, mold, or outdated wiring are common in distressed properties. ATTOM data shows rehab cost overruns average 10-20% for first-time flippers.
- Minimize hold time: Every extra month costs $1,500-$3,500 in holding costs. Start renovation immediately after closing, have contractors lined up before purchase, and price aggressively for a quick sale.
- Focus on kitchens and bathrooms: These rooms provide the highest return on renovation investment. According to the National Association of Realtors' Remodeling Impact Report, a kitchen renovation recoups 75% of its cost at resale, while bathroom remodels recover about 71%.
- Know your market's comps: Analyze at least 3-5 comparable sales within a half-mile radius sold in the last 90 days. Overestimating ARV is the most common mistake that turns profitable deals into losses.
- Factor in capital gains tax: Properties held less than one year are taxed as short-term capital gains at your ordinary income tax rate (up to 37% federally). Holding for over 12 months qualifies for long-term rates of 0%, 15%, or 20%.
Frequently Asked Questions
What is the 70% rule in house flipping?
The 70% rule is a guideline that caps the maximum purchase price at 70% of the After Repair Value minus estimated repair costs. For example, a home with a $300,000 ARV and $40,000 in needed repairs yields a maximum purchase price of $300,000 x 0.70 - $40,000 = $170,000. This 30% margin is designed to cover holding costs (typically 4-6 months at $1,500-$3,500/month), selling costs (8-10% of sale price), and still leave a reasonable profit. Seasoned investors in competitive markets sometimes use the 65% rule for extra safety margin, while those in hot markets may stretch to 75% for cosmetic-only flips.
What is a good profit on a house flip?
Most experienced flippers target a minimum net profit of $25,000 to $50,000 per flip, or a 15-25% return on total investment. According to ATTOM Data Solutions, the average gross profit on flips in 2024 was $66,000, though net profit after all expenses is typically $30,000-$45,000. Profits below $15,000 generally do not justify the risk, time, and effort involved, especially considering that unexpected repairs, extended holding periods, or market slowdowns can quickly erode thin margins. The target ROI should also account for your opportunity cost of capital.
What are typical closing costs when selling a flip?
Seller closing costs when selling a flipped property typically total 8-10% of the sale price. This breaks down to 5-6% in real estate agent commissions (2.5-3% for the listing agent and 2.5-3% for the buyer's agent), 0.5-2% in transfer taxes (varies significantly by state and county), and 1-2% in other closing costs including title insurance, escrow fees, and attorney fees. On a $300,000 sale, total selling costs would be $24,000-$30,000. Some flippers reduce costs by using flat-fee listing services or selling to investors directly, saving 2-3% in commissions.
How do I finance a house flip?
The most common financing options for house flips are hard money loans, which charge 10-15% interest with 2-5 points in origination fees but close in 7-14 days. Conventional investment property loans offer lower rates (7-8%) but require 15-25% down and take 30-45 days to close. Home equity lines of credit (HELOCs) on an existing property offer flexible draws at lower rates. Some flippers use cash from self-directed IRAs or partner with private investors who provide capital in exchange for a profit split, typically 50/50 or 60/40 favoring the active partner.
How long does a typical house flip take?
The average house flip in the United States takes approximately 178 days from purchase to sale, according to ATTOM Data Solutions. Cosmetic flips (paint, flooring, fixtures) can be completed in 2-3 months. Moderate renovations (kitchen/bathroom remodels, new HVAC) take 3-5 months. Full gut renovations involving structural work, new plumbing, or additions can take 6-9 months. After renovation, allow 30-90 days for marketing and closing. Every additional month of holding time costs $1,500-$3,500, so timeline management is critical to profitability.